FINANCE-CU R R E  N C  Y . 


An  act  to  prevent  iiimncial  panics,  emancipate  labor,  and  promote  the 
prosperity  of  the  people. 

» 

/  — i  . 


S  P  E  E  C  PI 

OF 

HON.  MOSES  W.  FIELD, 

OF  MICHIGAN, 

IX  THE  HOUSE  OF  REPRESENTATIVES, 

JANUARY  10,  1874. 

•'Let  us.  therefore,  in  behalf  of  a  depressed  and  suffering  people,  act  with  signal 
promptness  in  adopting  measures  that  wall  start  every  workshop  and  factory 
throughout  t lie  land,  set  the  unemployed  laborers  at  work,  and  bring  contentment 
and  happiness  to  the  people  of  the  whole  country." 

Mr.  FIELD.  Mr.  Speaker,  early  in  the  session  I  introduced  a  "bill 
(H.  1\.  No.  701)  entitled  "A  l)ill  authorizing  the  issne  of  3.05  con- 
vertible "bonds,  to  provide  for  their  intorchangeability  with  legal- 
tender  notes,  and  to  lessen  the  interest  on  the  public  debt and  I  will 
now  explain  the  provisions  of  the  hill  and  submit  my  reasons  in  sup- 
pofet  of  the  measure. 

The  first  section  provides  that  the  Secretary  of  the  Treasury  shall 
issue  on  demand,  in  exchange  for  legal-tender  notes,  the  bonds  of  the 
Government  in  denominations  of  fifty  dollars  and  upward,  bearing 
intercut  at  the  rate  of  3.05  per  cent,  per  annum,  and  principal  and 
interest  payable  in  the  legal-tender  or  lawful  money  of  the  United 
Slates.  I  assume  that  no  opposition  will  be  made  to  this  section  of 
the  bill.  If  the  people  choose  to  lend  our  Government  money  bearing 
this  low  rate  of  interest,  I  think  convenient  arrangements  should  be 
made  to  accommodate  them. 

The  venerable  Frederick  Fraley,  president  of  the  National  Board 
of  Trade,  a  gentleman  of  ripe  judgment  and  large  experience,  in  a 
speech  on  the  finances  before  the  board  at  its  recent  annual  meeting, 
expresses  the  opinions  very  generally  entertained  by  our  intelligent 
business  men  upon  the  necessity  and  public  utility  of  this  measure. 
He  says : 

During  the  summer  season  money  accumulates  in  the  great  commercial  centers 
of  the  country  and  becomes  such  a  .drug  there  that  it  is  loaned  for  all  sorts  of 
speculations.   It  is  not  actually  demanded  for  the  business  purposes  of  the  conn- 


try,  and  it  is  loaned,  to  a  very  large  extent,  to  the  speculators  and  gamblers  m 
stocks,  and  this  leads  to  a  very  dangerous  state  of  things  which  is  very  dangerous 
to  the  structure  upon  which  our  business  rests.  Now  this  proposition  for  the  issue 
of  certificates  of  debt,  bearing  a  moderate  rate  of  interest,  is  intended  to  provide 
for  such  a  state  of  things,  by  giving  to  those  who  hold  this  currency  in  excess  an 
opportunity  of  converting  it"  into  a  security  of  the  highest  character,  bearing  a 
reasonable  but  moderate  rate  of  interest,  with  the  privilege  of  reconverting  it 
into  currency  when  the  necessities  of  trade  and  the  fluctuations  of  the  season  shall 
demand  such  proceedings.  The  issue  of  such  certificates  woidd  give  an  oppor- 
tunity for  investment  of  the  funds  of  the  savings  institutions;  and  it  would  also 
give  an  opportunity  for  the  investment  of  the  surplus  currency  w  hich  might  be 
held  by  the  national  banks ;  it  would  enable  them  to  get  some  small  return  upon 
their  money,  instead  of  throwing  it  into  the  vortex  of  speculation. 

The  issue  of  Government  bonds  convertible  into  legal-tender 
notes  is  also  recommended  by  General  Spinner,  the  distinguished 
and  venerable  Treasurer  of  the  United  States.  In  his  last  report  he 
says  : 

At  other  seasons  of  the  year  nothing  like  the  legally  fixed  quantity  of  cuiTency 
is  needed;  neither  can  it  be  used  for  any  legitimate  purposes.  4  At  such  times  the 
holders,  naturally  desirous  to  "turn  an  honest  penny,"  finding  all  the  legitimate 
avenues  of  trade  closed,  either  engage  in  speculations  themselves,  or  place  their 
money  at  interest  with  corp orations  and  individuals,  who  too  often  use  it  for  pur- 
poses that,  in  point  of  morality,  are  but  little  removed  from  ordinary  gambling  and 
downright  swindling.  *  *  *  For  these  notorious  evils  a  remedy  should  be  found 
and  interposed.  In  looking  over  the  whole  ground,  no  scheme  has  presented  itself 
that  would  be  so  likely  to  accomplish  the  end  in  view  as  the  authorization  by  Con- 
gress of  the  issue  of  a  certain  amount  of  legal-tender  notes,  that  could  at  all  times 
be  converted  into  a  currency  interest-bearing  stock  of  the  United  States,  and  for 
which  the  holder  of  such  stock  so  authorized  could  at  pleasure  at  any  time  receive 
legal-tender  notes,  with  the  accrued  interest,  from  the  day  of  issue  of  such  stock 
to  the  day  of  its  redemption.  It  is  believed  that  a  rate  of  interest  no  higher  than 
3.65  per  cent,  will  be  high  enough  to  absorb  the  desired  amount  of  the  circulation 
when  not  needed  for  commercial  purposes,  and  low  enough  to  force  the  return  of 
the  bonds  in  exchange  for  legal-tender  notes  at  the  times  when  the  business  wants 
of  the  country  shall  require  more  currency. 

It  is  now  more  than  ten  years  since  Congress,  on  the  advice  of  the 
Treasury  Department,  refused  to  give  a  willing  and  patriotic  people 
the  privilege  of  furnishing  all  the  money  required  for  the  maintenance 
and  support  of  the  Government  at  a  moderate  rate  of  interest.  For 
some  reasons,  to  the  public  unknown  and  unexplained,  our  financial 
chiefs  and  leaders  insisted  upon  selling  bonds  at  extortionate  rates  of 
interest  and  on  conditions  calculated  to  facilitate  their  shipment  to 
Europe,  so  that  at  the  present  time  more  than  one-half  of  our  bonded  in- 
debtedness is  held  by  foreign  capitalists.  If  the  terms  and  conditions 
on  which  these  loans  were  invited  had  been  more  favorable  for  invest- 
ment in  our  own  country,  the  Government  would  have  been  supplied 
with  an  overflowing  Treasury  from  the  hands  of  the  American  peo- 
ple. In  issuing  currency,  too,  the  Government  has,  upon  the  largest 
portion,  insisted  on  paying  interests — amounting  in  the  aggregate 
nearly  to  $300,000,000 — and  the  issues  have  been  so  cunningly  arranged 
that  the  accruing  interest,  in  nearly  every  ease,  instead  of  going  into 
the  hands  of  the  people,  was  gathered  into  the  swollen  coffers  of 
bankers  and  money-changers.  The  interest  paid  on  compound-inter- 
est legal-tender  notes,  one  and  two  year  5  per  cent,  legal-tender  notes, 
and  certificates  of  indebtedness  was  a  gratuitous  and  shameful  waste 
of  public  money,  and  nineteen-twentieths  of  this  interest  money  fell 
into  the  hands  of  syndicates  and  bankers.  If  plain  greenbacks  had 
been  issued  instead  of  these  interest-bearing  notes,  the  burdens  of  the 
people  in  taxation  might  have  been  less  oppressive,  and  no  man  can 
assert  that  greenbacks  would  not  have  accomplished  this  purpose 
just  as  well,  if  not  better.  The  issue  of  compound-interest  notes  was  a 
stupid  compound  folly  of  the  Treasury  Department  for  which  our 
tax-payers  have  paid  over  s50.000.000  interest. 


I  aver  that  the  interest  paid  by  our  Government  was  w  holly  un- 
necessary and  unjustifiable  on  the  following  obligations,  allot'  which 
were  national  currency  in  circulation  : 

Statement  of  interest  paid  since  18G2  on  national  currency  in  circulation. 


Compound-interest  notes,  (legal-tender)   150,923,903 

ruited  States  notes,  one-year,  (le<;al-tender.)  3  per  eent   M,  -J-.";,  ooo 

I'nited  States  notes,  two-year,  (leyal-tender,)  5  per  cent   10,  G4e,  000 

Certificates  of  indebtedness,  (issued  for  commissary  stores,)  one-year, 

6  per  eent  '   33,705,194 

Temporary-loan  certificates,  4  per  cent   3,  000,  000 

Temporary-loan  certificates,  5  per  eent   5,  000,  000 

Three  per  cent,  certificates,  (convertible  into  greenbacks  on  demand,) 

3  per  cent   5,100,000 

Three-year  Treasury  notes.  7.3  per  cent.,   181,  770,  000 


Total   298,373,ls7 


Now,  there  is  no  hidden  mystery  about  this  matter.  Nearly  three 
hundred  million  dollars  have  been  needlessly  expended  for  interest  on 
Government  obligations,  which  were  a  part  of  the  circulating  medium 
of  the  country  ;  and  our  hard-working  farmers  and  producers  under- 
stand these  questions,  and  they  can  estimate  this  enormous  waste  of 
the  public  money  as  well  as  Jay  Cooke,  McCulloch  &  Co. 

In  view  of  these  facts  and  wrongs,  and  the  stupendous  mistakes,  if 
not  gross  designs,  against  the  Treasury,  let  us  now  offer  the  people  a 
convertible  bond,  bearing  3.65  per  cent,  interest,  in  exchange  for  the 
legal-tender  greenbacks  which  Congress  on  the  25th  day  of  February, 
L862,  by  solemn  enactment,  promised  the  American  people  should  be 
convertible*  at  the  option  of  the  holder,  into  Government  bonds  at  par. 
Let  us  at  least  make  good  this  express  contract  in  the  legal-tender  act. 

The  second  section  of  the  bill  provides  that  the  convertible  bonds 
shall  be  issued  bearing  interest  at  3.65  per  cent.,  and  the  same  shall 
be  made  payable  on  demand  at  the  Treasury  of  the  United  States,  and 
at  such  other  convenient  places  as  the  Secretary  of  the  Treasury  may 
designate  for  the  purpose.  I  think  no  objection  can  be  urged  to  this 
provision  in  the  bill.  It  provides  at  once  against  plethora  or  inflation 
of  the  currency,  assures  its  elasticity  and  stability,  and,  if  adopted  by 
Congress,  will  be  hailed  with  joy  by  the  people,  for  they  will  know 
that  on  this  fiscal  arrangement  no  financial  or  commercial  crisis  can 
disturb  the  commerce  and  industries  of  the  country,  and  for  all  time 
to  come  we  may  enjoy  exemption  from  the  destructive,  distressing, 
and  baneful  effects  of  revulsions  and  financial  panics.  Let  such  a  law- 
be  enacted  by  Congress,  securing,  as  it  will,  elasticity  to  the  currency, 
its  volume  to  be  expanded  or  contracted  to  meet  the  exact  needs  of 
the  sociefary  circulation,  in  active  as  well  as  in  passive  seasons  of 
business,  and  we  shall  have  a  financial  panacea  which  will  exempt 
our  country  in  the  future  from  the  power  of  the  rings,  the  money- 
changers, and  the  swindlers,  who,  with  a  iixed  and  unalterable  quan- 
tity of  lawful  money,  possess  the  power  to  crush  commerce  and  in- 
dustry to  suit  their  own  avarice  or  caprice.  We  need  at  once  and 
forever  to  clear  ourselves  from  the  unflinching  grasp  of  unprinci- 
pled and  unpatriotic  men,  who,  by  cornering  and  locking  up  our  law- 
ful money  in  times  of  stringency  and  peril,  exercise  their  power 
to  bring  upon  the  country  disaster  and  ruin;  and  while  merchants 
are  in  distress,  and  industries  embarrassed  or  paralyzed,  they  step 
in  to  buy  up  the  hard  earnings  of  a  helpless  and  bankrupt  people 
at  their  own  will  and  at  their-  own  prices.  Thus  '"the  rich  become 
richer  and  the  poor  poorer."  But  on  the  plan  proposed  in  this  bill  we 
need  have  no  apprehension  of  such  combinations  and  misfortunes  in 
the  future ;  the  surplus  earnings  of  the  people  will  be  lodged  with  the 
Government,  and  whenever  the  business  needs  of  the  country  require 


4 


an  increase  of  the  currency,  it  will  be  at  their  easy  call  famished  by 
the  Government  in  exchange  for  its  convertible  bonds. 

The  Treasurer  of  the  United  States,  again,  in  referring  to  the  neces- 
sity for  an  improvement  of  the  currency,  in  his  last  annual  report  says: 

Few,  if  any,  believe  that  the  volume  of  the  circulating  medium,  as  fixed  by  law, 
stands  at  an  amount  that  is  exactly  right.  It  must  be  obvious  to  all  who  have 
watched  the  course  of  the  business  and  financial  relations  of  the  country  that  there 
are  times  when  the  real  wants  of  the  country  demand,  and  there  should  he,  an  in- 
crease of  the  currency ;  and  that  there  are  other  times  when  the  safety  of  all  legiti- 
mate business  requires  that  it  should  be  largely  reduced.  "What  is  really  needed 
is  a  currency  so  flexible  as  to  at  all  times  accommodate  itself  to  the  real  business 
wants  of  the,  whole  country. 

The  greatest  objection  to  an  exclusively  metallic  currency  is  its  want  of  elasticity. 
That  there  are  regularly  recurring  times  when  the  wants  of  legitimate  trade  re- 
quire an  expansion  of  the  circulating  medium  to  an  amount  much  greater  than  is 
necessary  at  other  times,  is  a  faet  that  is  patent  to  all  observing  business  men. 

From  the  days  of  barter  among  the  savage  and  nomadic  tribes, 
when  shells  and  bark  and  stamped  leather  were  in  use  as  money,  and 
afterward  when  bullocks  and  iron  blooms  were  employed  for  the  pur- 
pose, even  down  to  the  period  of  silver  and  gold  currency,  the  use  of 
credit  in  exchanges  and  settlements  was  wholly  unknown ;  but  during 
the  past  and  present  centuries  thebank-note  and  the  bank-check  have 
been  more  universally  employed  as  the  instruments  of  exchange  than 
any  other  description  of  money.  Like  the  railroad  and  the  telegraph, 
they  have  been  the  outgrowth,  the  necessity,  and  the  complement  of 
civilization.  They  are  esteemed  by  merchants  as  superior  to  me- 
tallic money,  for  without  their  use  the  business  of  the  wholesale 
commuuity  could  not  be  transacted,  and  the  wheels  of  commerce 
would  become  clogged  ;ind  blocked.  In  England,  as  well  as  in  the  large 
cities  of  the  United  States,  the  bank-check  performs  the  function  of 
currency  in  volume  a  thousand  times  greater  than  the  metallic  money. 
Some  idea  of  the  extent  of  its  use  may  be  formed  by  considering  the 
operations  of  the  clearing-house  in  the  city  of  New  York,  where  the 
average  daily  transactions  exceed  $100,000,000;  and  in  effecting  ex- 
changes of  this  magnitude  very  often  not  a  quarter  of  a  million  dol- 
lars of  lawful  money  is  required.  But  outside  of  our  cities,  in  the 
interior  sections  of  our  broad  country,  bank-checks  are  not  so  practi- 
cable, and  the  currency  of  lawful  money  is  a  greater  convenience,  if 
not  an  actual  necessity,  for  the  people. 

There  are  two  kinds  of  money :  first,  that  created  by  the  sovereign 
or  by  the  national  legislature,  called  lawful  money;  second,  that  of 
courtesy,  which  is  employed  by  common  consent  and  convenience, 
such  as  bank-notes,  bank-checks,  letters  of  credit,  promissory  notes, 
bills  of  exchange,  and  bank  credits.  If,  however,  an  abundant  and 
adequate  supply  of  the  first  or  best  kind  be  furnished,  a  less  amount 
of  the  second  or  inferior  description  would  be  required  and  used  by 
the  people. 

Some  ignorant  persons  have  a  notion  that  money  should  be  redeemed, 
and  they  call  ours  ''irredeemable  currency**  and  "false  promises  to 
pay."  Now,  the  power  of  transferring  a  debt  from  one  to  another  is 
the  true  and  only  function  of  money.  Who  ever  heard  of  English 
sovereigns  or  American  eagles  being  redeemed  in  any  other  sense  ? 
Our  greenbacks  are  in  fact  redeemed  every  day  in  effecting  exchanges 
and  in  the  payment  of  debts.  Again,  others,  still  more  ignorant,  assert 
that  our  money  should  be  the  money  of  the  world — they  never  specify 
what  world,  nor  do  they  describe  the  kind  of  money  wanted,  nor  how 
Congress  is  to  exercise  its  "express  powers"  to  provide  lawful  money 
for  other  nations.  If  they  mean  gold  coin,  then  what  shall  be  done 
for  China  and  the  East  Indies,  containing  probably  one-third  of  the 
whole  population  of  the  globe,  and  whose  money  consists  solely  of 


o 

copper  and  silver.'  Our  sentimental  writers  oil  finance  should  know 
that  the  lawful  money  of  one  nation  becomes  merchandise,  like  corn 
and  pork,  in  another:  our  gold  coins,  when  shipped  abroad,  leave  the 
country  like  other  of  our  raw  products,  and  bankers  (haw  for  the  avails 
at  sight.  Such  persons  should  also  know  that  Congress  can  only 
provide  money  for  the  New  World  :  and  that  our  national  credit — the 
greenback — is  the  best  lawful  money  forthe  people  of  the  United 

States. 

Owing  to  a  disturbance  in  private  credits,  commencing  with 
the  failure  of  .Jay  Cook,'  Co.,  a  shrinkage  in  discounts  began 
in  September;  debts  could  not  be  paid  by  the  usual  currency; 
a  vast  volume  of  promissory  notes  and  bills  of  exchange  became 
unavailable  and  useless  for  settlements  and  exchanges,  and  a  great 
manufacturing  and  trading  population  were  compelled  to  fall  back 
on  the  totally  inadequate  and  limited  supply  of  legal-tender  and 
national-bank  currency.  The  banks  in  New  York  and  throughout 
the  country  were  obliged  to  suspend  payment  in  currency  and  resort 
to  an  illegal  issue  of  clearing-house  checks,  which  were  used  as  money 
to  the  extent  of  $24,000,000.  An  increase  of  our  lawful  money  was  the 
true  and  proper  remedy  for  the  crisis,  and  even  a  knowledge  of  the 
fact  that  legal-tender  notes  could  be  had  in  exchange  for  Govern- 
ment bonds  would  have  resulted  in  the  complete  restoration  of  con- 
fidence and  commercial  prosperity. 

All  our  bank-notes  and  Legal-tenders  are  not  equal  in  volume  to  one 
in  a  thousand  of  other  credits  used  in  ordinary  times  as  currency,  for 
the  entire  circulating  power  is  the  circulating  medium  of  the  country. 
The  rich  trader  requires,  in  ordinary  times,  but  little  legal-tender 
currency;  he  deals  in  private  credits,  such  as  bank-checks,  bills  of 
exchange,  and  promissory  notes.  This  is  the  currency  of  wholesale. 
But  the  industrious  classes,  the  day-laborer,  and  many  others  of  small 
means,  must  have  small  bills  for  daily  use.  This  is  the  money  of  retail. 

Unfortunately,  our  laws  fix  and  limit  the  volume  of  legal  currency, 
whic  h  has  been  very  much  contracted  since  1865.  In  the  mean  time 
the  business  of  the  country  has  vastly  increased;  paid  labor  now  fills 
the  Southern  States,  while  the  producing  classes  of  the  North  and 
of  the  great  West  have  multiplied  in  public  and  private  enterprises 
until  the  army  of  laborers  is  counted  by  millions.  The  boy  of  eight 
years  ago  has  now  become  a  man  and  must  have  a  man's  clothes,  else 
he  will  split  his  garments  in  every  seam.  Money  is  made  for  the  use  of 
producing  classes  principally,  and  its  volume  should  be  increased 
with  the  increase  of  population  and  with  the  growth  of  the  produc- 
tive industry  of  the  country. 

It  is  manifest  that  our  money  or  currency  must  be  increased  suffi- 
ciently to  pay  all  elasses  for  their  daily  labor,  or  we  must  reduce  the 
work  and  discharge  the  workers  now  employed  on  our  farms,  in  our 
mines  and  workshops.  The  question  is,  shall  the  currency  be  increased 
with  our  increase  of  labor  and  business,  or  shall  we  reduce  the  labor 
and  business  of  the  country  so  as  to  handle  the  traffic  conveniently 
with  the  volume  now  in  circulat  ion  ?  The  factory  employing  one  hun- 
dred mechanics  to-day  certainly  requires  more  currency  than  last  year 
when  only  ten  were  employed.  The  production  of  wealth  by  labor 
has  been  more  than  doubled  in  eight  years;  in  the  mean  time  our  na- 
tional currency  has  been  reduced  over  $1,300,000,000.  While  the  de- 
mand, therefore,  has  been  increasing,  the  supply  has  been  rapidly 
diminishing,  and  the  tightening  process  finally  culminated  last  Sep- 
tember in  throwing  one-half  of  our  laboring  population  out  of  work. 

The  question  is,  shall  we  reduce  the  population  of  the  country,  keep 
one-half  of  our  productive  forces  out  of  work,  and  destroy  two-third- 


6 


of  the  wealth  and  property  now  on  hand  for  the  purpose  of  accommo- 
dating our  condition  to  the  present  volume  of  the  currency  ?  If  Con- 
gress shall  refuse  to  augment  the  currency  in  order  to  meet  the 
increasing  needs  of  a  growing  country,  then  provision  should  he 
made  for  the  annual  destruction  of  our  Avealth.  We  should  burn  up 
our  corn  and  cotton,  our  homiiiy  and  our  hogs,  to  enable  us  to  effect 
our  exchanges,  and  thus  to  suit  the  views  of  the  ancients  on  finance 
and  currency.  The  amount  of  money  required  being  manifestly  pro- 
portionate to  the  number  and  value  of  the  exchanges  made,  it  follows 
that  as  population  increases  domestic  commerce  enlarges,  and  occu- 
pations are  diversified,  an  increase  of  the  circulating  medium  be- 
comes an  absolute  necessity  to  growth  and  prosperity. 

The  money  that  will  pay  one  thousand  men  will  not  pay  two  thou- 
sand unless  the  latter  reduce  the  price  of  labor  one-half.  Thus,  cur- 
rency must  be  increased  or  wages  reduced.  Which  of  these  alterna- 
tives, Mr.  Speaker,  will  you  choose  ? 

It  is  thus  apparent  that  in  this  question  of  currency  lies  the  con- 
flict between  capital  and  labor.  It  is  a  well-known  fact  that  when 
money  is  abundant  the  laborer  receives  his  full  reward,  and  prospers, 
but  when  money  is  scarce  the  laborer  finds  but  little  employment  even 
at  "starvation  prices."  Thus,  then,  if  we  unduly  restrict  the  volume 
of  currency  we  oppress  and  pauperize  labor,  while  we  give  capital 
more  power  to  deny  to  the  laborer  and  producer  a  fair  reward  for 
their  toil.  An  abundant  supply  of  ciuTency  facilitates  and  aids  pro- 
duction like  tools  in  the  hands  of  the  mechanic,  and  like  oil  on  tiie 
axle,  it  accelerates  and  expedites.  Its  volume  should  not  be  fixed  by 
law,  for  its  uses  are  as  changeable  and  variable  as  the  wants  of  man. 
A  single  cup  of  water  may  suffice  in  winter,  but  the  workman  during 
the  heat  and  dust  of  summer  may  need  another  draught ;  and  so  it 
is  with  currency — more  is  required  at  one  season  than  at  another. 

Under  the  operation  of  this  bill,  the  volume  of  our  currency  would 
be  self-adjusting,  expanding  or  contracting  with  the  needs  of  the 
people,  by  this  simple  property  of  interconversion  ;  for  convenient 
facilities  are  afforded  for  changing  at  any  time  currency  into  bonds, 
or  bonds  into  currency.  The  total  amount  of  6  per  cent,  bonds  now 
outstanding  is  $1,218,728,150;  and  should  this  entire  amount  within 
a  few  years  become  transferred  to  3.65  convertible  bonds  there  would 
be  an  annual  saving  of  $28,642,744  in  interest  on  the  public  debt.  On 
this  point  I  again  refer  to  the  able  report  of  the  Treasurer  of  the 
United  States.  He  says: 

This  would  change  a  large  amount  of  the  indebtedness  of  the  nation  from  6  per 
cent,  gold-interest-bearing  bonds  to  others  bearing  a  lower  rate  of  interest,  payable 
in  currency,  thus  making  a  great  saving  to  the  nation,  and  at  the  same  time  giving 
to  all  the  'people  who  choose  to  avail'themselves  of  its  benefits  a  place  of  safe 
deposit  where  they  will  be  able  to  receive  interest  on  their  surplus  means. 

I  have  prepared  statements  showing  the  large  contraction  made 
during  the  past  eight  years  in  the  volume  of  circulation. 

On  the  1st  of  September,  1865,  the  circulating  medium  consisted, 
in  part,  as  follows  : 


United  States  notes   f  133, 160,  560 

Fractional  currenc  v   26,  344,  742 

X atiomil-bank  notes   300,  000,  000 

Compound-interest  legal-tender  notes   217,  024, 160 

Temporary-loan  certificates.  10  d-d   107, 148,713 

Certificates  of  indebtedness   85,  003,  000 

Treasury  5  per  cent,  legal-tenders   32,  536,  90 1 

Treasury  notes,  legal-tenders  past  due  and  not  presented   1,  503,  020 

State-hank  notes    78,  867,  575 

Three-year  Treasury  notes   830,  000,  000 


Total   2,111,678,680 


On  the  1st  of  December,  1973,  tin*  circulating  medium  consisted  in 
part  as  follows  : 

United  States  notes  8307,  001,  Gsr> 

Fractional  currency   48,000,000 

Certificates  of  indebtedness   078,000 

Xational-bank  notes. . :   350,  000,  000 

Total   703, 079,  685 

It  will  be  perceived  by  the  exhibit  here  made  that  the  currency 
lias  been  reduced  $l,345,998",995  since  September  1,  1805. 

The  history  of  panics  in  England  and  in  our  own  country  discloses 
the  fact  that  a  sovereign  and  unfailing  remedy  is  obtained  by  increas- 
ing the  currency.  In  England  this  has  been  done  in  violation  of  law. 
In  America  let  enlightened  Legislation  prevent  the  occurrence  of  finan- 
cial disorders  in  the  future. 

Referring  to  the  existing  panic,  the  Treasurer  of  the  United  States 
says : 

This  could  not  have  happened  had  there  been  an  clastic  and  flexible  instead  Of 
our  present  rigid  and  unyielding  currency.  There  is  scarce  a  doubt  but  this  finan- 
cial revulsion  lias  cost  the  people  in  the  aggregate  hundreds  of  millions  of  dollars, 
to  say  nothing  of  the  loss  of  revenue  to  the  Government. 

The  views  of  the  Comptroller  of  the  Currency  on  the  panic  and  the 
remedy  therefor  maybe  found  in  his  last  report,  (page  22.)  He  says: 

It  can  hardly  he  doubted  that  if  the  surplus  means  of  the  country  hanks  which 
were  invested  in  call  loans  by  their  city  correspondents  had  been  invested  in  public 
funds,  convertible  into  cash  upon  demand,  the  disastrous  results  of  the  late  panic 
WOUld  have  been  avoided. 

A  Government  issue  of  certificates,  bearing  a  low  rate  of  interest,  to  be  counted 
as  a  certain  proportion  of  the  reserve,  is  the  proper  remedy  for  such  a  state  of 
things.  If  the  surplus  of  the  country  banks  had  been  to  a  considerable  extent  in- 
vested in  such  Government  certiticates  the  drafts  upon  the  city  banks  would  have 
been  proportionately  less;  and  if  the  surplus  funds  of  the  city  banks  had  likewise 
been  held  in  such  certificates,  thcavailsof  such  certiticates  would  have  been  quietly 
withdrawn  from  the  Treasury,  and  the  banks  would  have  found  themselves  pos- 
sessed of  ready  means  with  which  to  supply  the  demands  of  their  dealers. 

By  the  act  of  March  3,  18G3,  Congress  authorized  the  issue  of  frac- 
tional currency  "not  exceeding  $50,000,000;"  but. the  traffic  of  the 
country  not  requiring  so  large  a  sum  of  these  small  bills,  The  amount 
issued  has  never  exceeded  s48.000.0U0.  The  amount  outstanding  has 
varied  between  $85,000,000  and  $48,000,000,  and  probably  $10,000,000 
of  the  issue  have  been  worn  out  and  destroyed.  I  refer  to  this  fact  as 
an  illustration  of  the  safe  working  of  the  convertible  plan  contem- 
plated by  this  bill.  The  people  have  taken  only  $48,000,000  fractional 
currency,  although  they  might  have  had  s.~>0, 000,000 ;  and  so  it  will  be 
with  regard  to  the  amount  of  greenbacks  to  be  issued  in  exchange 
for  bonds — no  more  will  be  taken  than  the  business  interests  of  the 
country  require  ;  and  should  the  volume  of  currency  at  any  time 
become  redundant,  the  unproductive  or  excessive  portion  could  be 
conveniently  exchanged  for  the  interest-bearing  bonds. 

Now,  if  the  Secretary  of  the  Treasury  at  the  beginning  of  the  exist- 
ing panic  had  promptly  paid  out  the  $44,000,000  legal-tender  reserve 
in  exchange  for  Government  bonds,  distributing  the  same  to  the 
principal  cities  of  the  country,  it  would  have  been  checked  and  ended. 
The  Secretary  would  not  have  been  under  the  necessity  of  asking  Con- 
gress to  tax  the  people  to  increase  the  revenue,  for  the  prosperity*  of  the 
country — a  reserve  not  to  be  disregarded — would  have  continued,  the 
receipts  of  the  Treasury  would  have  been  ample  for  all  public  expendi- 
tures, and  the  wealth  of  the.  nation  would  have  been  over  $]  .000,000,000 
greater  than  it  is  to-day.  No  business  man  of  any  experience  will  doubt 


8 


this  statement.  Let  us,  therefore,  in  behalf  of  a  depressed  and  par- 
alyzed people,  act  with  signal  promptness  in  adopting  measures  that 
wUl  start  every  workshop  and  factory  throughout  the  land,  set  the 
unemployed  laborers  at  work,  and  bring  contentment  and  happiness 
to  the  people  of  the  whole  country. 

The  experience  of  England  has  been  similar  to  ours  in  commercial 
revulsions.  The  panic  of  1825  has  been  graphically  described  by 
Mr.  Huskisson  in  the  House  of  Commons,  (Pari.  Debs.,  vol.  14,  page 
230.)  He  says:  "It  was  impossible  to  convert  into  money,  to  any 
extent,  the  best  securities  of  the  Government.  Persons  could  not 
sell  exchequer  bills,  nor  bank  stock,  nor  East  India  stock,  noi  the 
public  funds."  Mr.  Baring  said  that  "men  would  not  part  with 
their  money  on  any  terms  nor  for  any  security.  Persons  of  un- 
doubted wealth  and  real  capital  were  seen  walking  about  the  streets 
of  London  not  knowing  whether  they  should  be  able  to  meet  their 
engagements  of  the  next  day."  At  this  juncture  of  the  crisis,  Decem- 
ber 14,  the  banks  totally  changed  their  policy  and  discounted  with 
the  utmost  profuseness.  They  made  enormous  advances  on  excheq- 
uer bills  and  securities  of  all  sorts,  and  the  great  London  panic  of 
1825  was  completely  allayed  by  the  profuse  issue  of  the  notes  of  the 
Bank  of  England  in  excess  of  the  limitation  fixed  by  its  charter. 
Between  the  14th  and  17th  of  December  the  bank  issued  over 
£5,000,000  in  bank-notes.  This  bold  policy  on  the  part  of  the  Bank 
of  England  directors  and  the  ministry  was  crowned  with  the  most 
complete  success;  the  panic  was  stayed  almost  immediately  through- 
out the  kingdom,  and  private  credits  were  again  available  for  busi- 
ness purposes.    (Macleod  on  Banking,  vol.  2,  p.  253.) 

All  contemporary  evidence  proves  tli.it  it  was  this  profuse  issue  of  £5.000.000  of 
paper  by  the  Bank  of  England  in  a  few  days  that  stayed  the  panic.  If  the  bank 
had  persevered  in  the  restrictive  policy  required  by  law  for  three  days  longer,  the 
total  and  entire  destruction  of  commercial  credits  would  infallibly  have  ensued. — 
Macleod  on  Banking,  vol.  2,  p.  252. 

I  again  quote  from  the  same  authority,  describing  the  great  panic 
of  October,  1847 : 

From  Monday,  the  18th.  to  Saturday,  the  23d,  was  the  great  crisis.  On  Monday 
the  Royal  Bank  of  Liverpool,  with  a  paid-up  capital  of  ££00,000,  stopped  payment, 
which  caused  the  funds  to  fall  2  per  cent.  This  was  followed  by  the  stoppage  of 
the  North  and  South  Wales  Bank,  also  of  Liverpool,  the  Liverpool  Banking  Company, 
the  Union  Bank  of  Newcastle,  heavy  runs  on  the  other  banks  of  the  district,  aiid 
other  bank  failures  at  Manchester  and  in  the  west  of  England.  As  the  Avhole  com- 
mercial world  knew  that  the  resources  of  the  banking  department  were  being  rap- 
idly exhausted  a  complete  panic  seized  them.  A  complete  cessation  of  private 
discounts  followed.  The  most  exorbitant  sums  were  offered  to,  and  refused  by, 
merchants  for  acceptances  and  commercial  bills. 

The  continued  and  ever-increasing  severity  of  the  crisis  caused  the  ministry  on 
the  23d  to  authorize  the  bank  to  issue  notes 'beyond  the  limits  prescribed  by  tin- 
bank  act.  whereupon  the  bank  immediately  acted  upon  it  and  discounted  freelv  at 
9  per  cent.  The  letter  of  the  ministry  proposing  to  submit  to  Parliament  a  bill  of 
indemnity  for  the  infringement  of  the  law  by  the  bank  was  not  made  public  until 
one  o'clock  on  Monday,  the  25th,  and  no  sooner  was  it  done  than  the  panic  vanished 
like  a  dream. 

Mr.  Gurney  stated  that  it  produced  its  effects  in  less  than  ten  minutes.  No 
sooner  was  it  known  that  notes  might  be  had  than  the  want  of  them  ceased.  Not 
only  did  no  infringement  of  the  act  take  place,  but  the  whole  issue  of  notes  in  con- 
sequence of  this  letter  from  the  ministry  was  only  £400,000,  so  that  while  atone 
moment  the  whole  credit  of  Great  Britain  was  in  imminent  danger  of  total  destruc- 
tion, within  one  hour  it  was  saved  by  the  issue  of  £400,000  of  the  Bank  of  England 
notes. — Ibid.,  p.  313. 

Now,  if  the  illegal  issue  of  bank-notes  saved  England  from  an  im- 
pending commercial  catastrophe,  should  Ave  not  provide  by  law  for 
the  issue  of  our  greenbacks  in  exchange  for  Government  bonds  in 


9 


limes  of  need,  and  thus  prevent  the  recurrence  of  panics  and  com- 
mercial disorders  in  the  United  Slates  .' 

"In every  civilized  country,"  says  Tooke,  "-supplying  and  regulating 
the  circulating  medium  is  a  function  of  sovereign  prerogative."  This 
doctrine  has  been  adniiltcd,  and  the  power  exercised  in  all  ages;  and 
since  the  t'omiuest  the  legal  money  of  England  has  been  regulated  or 
altered  by  proclamation  of  the  Crown,  or  by  act  of  Parliament,  one 
hundred  and  eighty-four  times.  Nearly  every  sovereign  has  altered 
the  standard  of  money  and  legalized  variations  in  its  weight  and 
denominations,  and  it  has  been  so  often  reduced  in  value,  and  its 
quality  from  time  to  time  so  debased,  that  the  lawful  money  of  Eng- 
land to-day  in  weight  is  not  one-third  what  it  was  in  the  twenty- 
eighth  year  of  Edward  I.  In  the  days  of  William  the  Conqueror 
the  ''pound"  actually  was  a  pound  weight,  pure  silver,  and  a  shilling 
was  a  twentieth  part  of  a  pound;  but  at  the  present  day  the  pound 
is  coined  into  sixty-six  shillings;  and  yet  the  standard  of  money  has 
been  less  degraded  in  England  than  in  any  other  country. 

To  hx  the  standard  and  regulate  money  is  of  necessity  a  govern- 
mental function,  and  in  this  country  this  power  has  been  lodged 
solely  with  Congress.  All  governments  have  assumed  to  alter  the 
standard  of  money,  and  to  change  what  they  had  a  right  to  make. 
The  facts  in  the  history  of  American  coinage  show  the  view  which 
Congress  has  taken  of  its  own  powers.  On  the  6th  of  July,  1785, 
the  money  unit  of  the  United  States  was  adopted,  and  on  the  8th 
of  August,  1786,  Congress  enacted  that  the  silver  dollar  should  con- 
tain 375.64  grains;  that  the  gold  eagle,  or  ten  dollars,  should  contain 
246.2(i8  grains;  and  that  the  half -eagle,  or  five  dollars,  should  contain 
1*2:5.134  grains,  all  composed  of  eleven  parts  fine  and  one  part  alloy. 
The  mint  price  of  a  pound,  troy  weight,  of  uncoined  silver  was  fixed 
at  69.92.  On  the  16th  of  October,  1786,  an  ordinance  was  passed  estab- 
lishing the  United  States  Mint,  and  the  mint  price  of  one  pound 
of  silver  coin  was  then  fixed  at  $13.77.  By  the  act  approved  April 
2,  1792,  the  weight  of  the  eagle  was  increased  and  fixed  at  270  grains, 
the  half-eagle  135  grains,  and  the  silver  dollar  416  grains.  The  dollar 
was  declared  to  be  the  unit  of  Federal  money,  and  both  gold  and  silver 
coins  were  made  a  legal  tender  for  all  sums.  By  the  act  of  June  28, 
1834,  the  weight  of  the  eagle  was  fixed  at  258  grains,  the  half-eagle 
at  129  grains,  and  the  silver  dollar  at  412?}  grains,  thus  reducing 
the  weight  of  these  coins  4  per  cent.  By  act  of  Congress  approved 
January  18,  1837,  the  weight  of  silver  and  copper  coins  was  altered, 
and  the  standard  of  both  silver  and  gold  was  altered  to  nine  parts 
line  and  one  part  alloy.  Other  changes,  exceeding  6  per  cent.,  were 
made  in  the  standard  and  quality  of  money  by  acts  of  Congress  ap- 
proved March  3,  1851,  and  February  21,  1853,  and  the  legal-tender 
quality  of  silver  was  limited  to  sums  of  five  dollars. 

This  summary  of  legislation  shows  that  Cougress  has  exercised  the 
power  of  determining  what  shall  be  legal  tender — altering  the  laws 
regulating  money  according  to  the  exigency  of  circumstances ;  increas- 
ing or  diminishing  the  quantity  and  purity  of  gold,  silver,  and  copper 
coins  at  its  pleasure ;  changing  their  intrinsic  worth,  while  retain- 
ing the  same  titles,  hestowing  upon  thehi  the 'same  nominal  value, 
and  declaring  Treasury  notes  issued  at  the  close  of  the  war  of  1812, 
and  also  during  the  Mormon  troubles  in  1857,  legal  tender  for  cer- 
tain purposes.  The  act  of  Congress  approved  February  25,  1862,  in- 
vested the  United  States  notes  with  the  legal-tender  quality.  They 
were  of  small  denominations  and  entered  into  general  circulation, 
and  they  continue  to  be  the  lawful  money  of  the  country.  Con- 


10 


gross  having  the  power  to  make  these  changes  has  also  the  same 
right  to  make  any  further  changes  which  may  seem  to  it  wise.  If 
it  can  declare  that  silver  shall  not  he  a  legal  tender  for  any  amount 
ahove  five  dollars  it  can  declare  that  it  shall  not  he  a  legal  tender  at  all, 
and  it  may  deal  in  the  same  way  with  gold.  It  is  not  hound  to  either 
except  hy  its  own  discretion.  So,  also,  if  it  can  alter  the  intrinsic 
value  of  these  coins  1,  2,  or  6  per  cent,  without  impairing  their 
legal-tender  quality  at  the  same  nominal  value,  it  may  do  the  same 
thing  to  a  still  greater  extent.  In  one  word,  Congress  has  always 
proceeded  upon  the  assumption  that  the  whole  question  of  creating 
money  and  altering  it  lies  within  its  constitutional  competency. 
Moreover,  when  changes  have  heen  made  in  the  weight  and  fineness 
of  legal-tender  coins,  reducing  their  intrinsic  worth,  dehts  contracted 
hefore  such  changes,  and  made  payahle  in  dollars,  have  heen  paid  in 
the  new  coins  at  their  nominal  value,  and  the  dehts  discharged.  In 
every  such  case  the  ohligation  was  contracted  under  one  standard 
and  liquidated  under  another. 

It  is  quite  true  that  not  until  the  late  war  had  any  occasion  arisen 
to  alter  the  legal  tender  except  in  relation  to  coinage.  Then,  however, 
Congress,  in  the  exercise  of  those  powers  which  are  ''necessary  ami 
proper"  for  carrying  into  execution  its  express  powers,  saw  fit  to 
invest  United  States  notes  with  the  legal-tender  quality.  It  had  the 
powerful  precedent  of  the  English  Parliament  in  the  hank  act  of 
1833,  wherein  the  legal-tender  quality  was  imparted  to  hank-notes, 
and  carried  in  the  House  of  Commons  hy  a  vote  of  214  to  156.  There 
is  not  a  clause  in  the  fundamental  law  of  the  land,  which  confines 
Congress  to  gold  and  silver  as  the  materials  of  which  the  legal 
tender  must  he  composed,  or  which  forhids  it  to  use  copper  or 
platina,  or  anything  else  in  its  discretion,  or  restrains  it  from 
making  any  change  in  quality  or  kind,  which  in  its  judgment 
may  he  required  hy  circumstances.  There  are  such  clauses  in  re- 
spect to  the  powers  of  the  States,  hut  none  in  respect  to  those  of 
Congress.  As  to  the  whole  question  of  creating  money,  designat- 
ing its  titles,  and  fixing  its  value,  the  people  chose  to  make  Con- 
gress the  sole  depository  of  legal  power,  without  limitations  upon 
its  exercise;  leaving  it  to  act  in  the  premises,  to  revise  its  own 
action,  and  from  time  to  time  to  change  its  monetary  laws  ac- 
cording to  its  best  judgment.  It  is  not  true,  as  is  too  often  assumed, 
that  in  respect  to  the  laws  of  Congress  the  legal-tender  property  is 
hy  the  Constitution  attached  to  gold  and  silver,  and  to  these  only. 
The  truth  is  the  Constitution  does  not  make  anything  money — either 
gold,  or  silver,  or  anything  else — hut  leaves  this  question  with  the 
legislative  department  of  the  Government,  imposing  no  restraints  or 
limitations  upon  its  discretion,  and  assuming  that  it  would  he  gov- 
erned hy  the  general  principles  of  expediency  and  common  sense. 
Xow.  in  view  of  these  antecedents  and  principles,  I  feel  compelled  to 
regard  the  powers  of  Congress  over  the  money  of  the  Republic  abso- 
lutely sovereign,  complete,  indivisible,  and  unrestrained. 

By  act  of  Parliament  in  the  time  of  William  IV,  the  promissory 
notes  of  the  Bank  of  England  were  declared  a  legal  tender.  This 
hank  is  a  private  corporation ;  and  yet  Parliament  deemed  it  neces- 
sary and  expedient  to  declare  its  notes  a  legal  tender  throughout 
England.  Would  it  not  have  heen  more  in  accordance  with  the  tra- 
ditions and  precedents  of  England  had  Parliament  conferred  this 
quality  of  lawful  money  and  legal  tender  on  the  credit  of  the  British 
government  ?    They  had  not  advanced  far  enough  for  that,  and  it 


1 1 


remained  for  the  Congress  of  the  United  States,  representing  the 
most  intelligent  ami  the  most  highly  civilized  people  oj'  the  world, to 
coin  "the  credit  of  the  nation/' and  it  lias  thus  wisely  provided  a 
lawful  money  for  the  people,  an  instrument  of  exchange  more  per- 
fect than  that  of  any  other  nation;  In  our  progress  and  develop- 
ment a  great  stride  was  taken  in  monetary  science  when  the  Legal- 
tender  act  of  lHi-J  was  approved  hy  the  President  of  the  United 
Slates;  and  now  to  perfect  our  fiscal  system  is  .the  task  which  Con- 
gress must  undertake  and  accomplish,  i  have  referred  to  the  acts  of 
Parliament  and  of  Congress  in  relation  to  metallic  money,  and  the 
innumerable  changes  and  depreciations  made  therein  by  law,  for  the 
purpose  of  showing  the  superior  advantage  of  choosing  the  national 
credit  for  use  as  money.  Its  quality  and  weight  cannot  be  debased 
or  reduced,  nor  is  if  liable  to  commercial  changes  in  value,  like 
gold  and  silver.  Sucb  commodities  are  always  affected  by  the  condi- 
tion of  foreign  trade,  and  by  the  law  of  supply  and  demand.  On  the 
contrary,  the  credit  of  a  great  and  powerful  and  wealthy  nation  is  un- 
changeable; it  possesses,  too,  intrinsic  value,  and  it  represents  labor: 
for  the  credit  of  our  country  was  issued  in  exchange  for  the  labor 
expended  to  perpetuate  the  nation's  life.  It  is  less  changeable  in 
value  than  any  other  thing,  and  for  this  reason  if  is  the  best  instru- 
ment ever  devised  for  a  circulating  medium. 

I  call  the  attention  of  tbe  House  to  the  petitions,  the  resolutions  and 
declarations,  of  numerous  societies  and  associations  of  workingmen, 
of  conventions'  and  granges,  throughout  the  country,  demanding  ex- 
pressly tbe  provisions  of  law  embraced  in  this  bill.  I  will  particu- 
larly refer  to  the  following  resolve  of  the  Detroit  Manufacturers' 
Association,  adopted  on  the  30th  of  January,  1868: 

Resolved,  That  Congress  should  now  provide  for  the  funding  of  that  portion  of 
the  national  debt  not  required  for  a  circulating  medium,  by  the  issue  of  bonds  or 
consols  bearing  interest  not  to  exceed  3.(35  per  cent.;  and  the  national  money, 
(greenbacks,)  at  the  option  of  the  holder,  should  be  convertible  to  such  bonds 
at  par,  and  the  bonds  should  also  be  convertible  to  legal-tender  notes  at  par  on 
demand. 

They  all  ask  that  the  principle  of  inferconverwon  of  bonds  and 
legal-tender  notes  may  become  tbe  permanent  fiscal  system  of  the 
country.  It  is  not  inflation,  because  when  tbe  small  notes  are  paid 
out  the  larger  bonds  are  withdrawn ;  and  if  tbis  system  bad  been  put 
in  operation  by  the  Forty-second  Congress,  the  existing  panic  could 
not  have  visited  and  desolated  our  country. 

The  third  section  of  the  bill  provides  that  the  money  received  in 
exchange  for  the  convertible  bonds,  after  redeeming  such  as  may  be 
presented  for  payment,  shall  be  used  weekly  in  buying  up  the  6  per 
cent,  obligations  of  the  Government  in  open  market.  Who  can  object 
to  this?  Will  it  not  tend  slowly  but  gradually  to  transfer  our  in- 
terest-bearing debt  from  6  per  cent,  to  3.65  per  cent.,  the  greater 
portion  of  which  will  be  lodged  in  the  hands  of  our  own  people 
instead  of  being  transported  to  foreign  countries  to  be  forced  back 
upon  us  at  unpropitious  times?  If  the  objection  be  made  that  bonds 
bearing  3.65  cannot  be  floated  at  tbe  present  time,  I  have  to  say  that, 
in  view  of  our  financial  history  since  1861,  and  tbe  promptness  ex- 
hibited by  our  people  in  taking  the  temporary-loan  certificates,  1  he  3 
per  cent,  certificates,  and  other  similar  securities,  and  with  my  experi- 
ence in  business  affairs  for  a  quarter  of  a  century,  I  am  satisfied  that 
at  least  $250,000,600  of  the  convertible  bonds  would  be  taken  within 
twelve  months,  and  the  difference  in  interest — a  clear  saving  to  the 
Treasury — even  on  this  amount  would  enable  us  to  discontinue  the 


L2 


stamps  now  required  on  "bank-checks,  druggists'  goods,  and  matches, 
and  the  obnoxious,  unprincipled,  and  chafing  tax  now  levied  on  the 
leaf-tobacco  produced  by  our  farmers.  The  terms  and  conditions  of 
a  credit  have  much  to  do  with  its  value,  and  the  convertible  bonds 
provided  for  in  this  bill  would  be  more  attractive  to  thousands  and 
millions  of  our  people  than  these  6  per  cent,  non-convertible  bonds, 
on  account  of  the  value  of  the  option  of  converting  the  same  on  demand 
into  legal-tender  notes.  The  people  want  this  right,  and  for  it  they 
will  lodge  their  money  at  a  very  low  rate  of  interest.  A  national 
standard  rate  of  interest  as  a  regulator  is  thus  secured.  The  rates  for 
the  usance  of  currency  when  required  in  moving  the  great  crops  of 
the  South  and  West,  and  in  all  our  manufacturing  and  ot  her  useful 
industries,  cannot  ever  rise  above  the  limit  of  its  profitable  employ- 
ment. In  short,  working  with  the  ease  and  simplicity  of  the  governor 
on  the  steam-engine,  a  system  will  be  inaugurated,  doing  good  to  all 
and  injustice  to  none,  a  system  which  will  prevent  money-changers  and 
Shylocks  from  extorting  from  useful  industry  a  slice  or  shave  for  in- 
terest, in  the  past  often  exceeding  the  whole  earnings  of  labor,  thus 
cursing  and  blighting  the  effort  s  of  toil,  and  effectually  shackling  the 
prosperity  of  the  whole  country.  In  providing,  therefore,  for  the  in- 
terchange of  national  bonds  and  currency  the  Government  is  bene- 
fited in  lessening  the  interest  on  the  public  debt  ;  and  at  the  same 
time  facilities  are  afforded  the  people  for  investing  their  earnings 
with  a  knowledge  that  they  cannot  possibly  suffer  loss.  The  scheme, 
therefore,  commends  itself  as  a  financial  reform  of  the  highest  impor- 
tance to  the  Treasury.  I  call  the  attention  of  the  House  to  the  sim- 
plicity of  the  arrangement.  There  is  no  useless  machinery.  It  can 
be  plainly  understood  by  every  person,  the  interest  being  a  penny  a 
day  on  each  one  hundred  dollars  of  the  bonds ;  and  on  surrender  of 
the  bonds  at  any  Government  depository  the  principal,  with  the 
accrued  interest,  will  be  paid  in  legal-tender  notes  and  the  bond  can- 
celed. If  only  a  part  be  required,  then  a  new  bond  will  be  issued  for 
the  difference.  In  this  respect  the  operation  will  be  similar  to  the 
certificates  of  deposit  now  issued  by  the  banks.  When  the  certifi- 
cates are  presented  for  payment  and  paid  they  are  canceled;  when 
part  paid  a  new  certificate  is  issued  for  the  difference  and  the  old  cer- 
tificate surrendered.  The  notes  of  the  Bank  of  England,  you  kuow, 
when  once  redeemed  are  never  reissued. 

Some  persons  may  think  that  these  convertible  bonds  Avill  not  be 
called  for  while  5  per  cent,  ten-year  bonds  are  in  the  market,  but  I 
remind  the  House  that  a  3.65  convertible  bond  would  in  many  cases 
be  preferred,  for  the  convenient  conversion  of  the  bonds  to  green- 
backs whenever  the  necessity  of  the  holder  requires  is  a  condition 
Which  gives  them  a  greater  value  thau  those  bearing  a  higher  rate 
of  interest  but  on  long  time.  The  temporary -loan  certificates  which 
were  authorized  by  Congress  in  1862  to  the  amount  of  .$175,000,000  were 
all  taken  up  by  the  people,  although  made  payable  on  ten  days'  notice 
and  at  4  per  cent,  and  5  per  cent,  interest.  They  were  held  until 
their  surrender  was  demanded  by  the  order  of  the  Treasury.  The  3 
percent,  certificates  authorized  by  Congress  to  theextent  of  §75,000,000 
were  also  speedily  taken  and  held  by  the  people  until  their  surrender 
was  required ;  and  in  like  manner  the  bonds  bearing  3.65  as  provided 
for  in  this  bill  will  be  promptly  taken  ;  -and  should  the  amount  in  the 
lapse  of  a  few  years  be  equal  to  the  total  amount  of  the  6  per  cent, 
bonds  now  outstanding,  I  see  no  objection  to  the  working  of  the  meas- 
ure; on  the  contrary,  a  grand  fiscal  success  is  achieved,  for  which  a 
patriotic  and  intelligent  iieople  will  be  ever  grateful  to  Congress. 


In 
o 

The  British  consols  or  "3pei  cents"  are  owned  by  Kngli>limen,fortlie 
reason  that  certificates  are  not  issued  at  all  ana  the  consols  arc  not 
transferable  except  on  the  books  of  the  chancellor  of  the  exchequer 
at  the  Bank  of  England;  so  our  convert ible  !J.d5  bonds  would  lie  a 
domestic  loan,  and  they  would  remain  in  the  hands  of  the  American 
people. 

I  now  come  to  the  last  section  of  the  hill,  which  provides  that  the 
national  banks  shall,  on  and  after  the  30th  of  June,  1874,  cease  to  be 
hanks  of  issue,  and  that  their  notes  are  to  he  withdrawn  in  the  same 
manner  as  now  provided  by  law  for  hanks  that  are  being  wound  up  or 
choose  to  discontinue  the  issuing  of  bank-notes.  I  very  much  ques-: 
tion  the  power  of  Congress  to  authorize  private  associations  to  issue 
notes  to  be  used  as  money  by  the  people]  and  at  any  rate  it  is,  in  my 
judgment,  a  bad  bargain  for  the  Government  to  hire  banking  associa- 
tions to  furnish  money,  paying  them  for  the  service  the  handsome 
sum  of  $18,000,000  per  annum.  The  banks  lodge  the  national  credit 
in  the  shape  of  6  per  cent,  bonds  to  secure  their  circulation,  and 
which  yield  them  no  less  than  sl8,000,000  interest  in  gold.  Now, 
why  should  we  not  cut  up  this  $300,000,000  of  6  per  cent,  bonds 
into  small  notes  for  circulation  bearing  no  interest,  and  thus  save 
|18,000,000  per  annum  !  Take  notice,  it  is  the  national  credit  for  the 
same  amount,  but  in  a  different  shape;  and  by  making  the  change  we 
lessen  the  burden  of  the  people,  who  will  have  that  much  of  interest 
less  to  pay  each  yeai\  The  banks  of  course  will  cry  out  "  inflation."' 
and  we  must  be  prepared  for  that;  but  it  is  simply  a  "stop-thief" 
dodge.  The  fact  is,  our  banks  in  issuing  notes  effect  an  actual  infla- 
tion of  credit,  for  on  Government  bonds  of  81,000,000  they  issue,  say, 
another  million  in  bank-notes,  making  8-2,000,000  floating  credit  in- 
stead of  $1,000,000.  The  credit  of  the  Government,  being  less  change- 
able in  intrinsic  value  than  any  other  thing,  is  good  enough  for  ourlaw- 
ful  money,  and  we  do  not  require  the  aid  or  indorsement  of  banks  in 
furnishing  a  circulating  medium  for  the  people.  Congress  has  enact  ed 
that  the  credit  of  the  nation  should  be  money ;  it  is  our  legal  tender 
and  lawful  money  for  many  purposes;  it  now  requires  the  act  of 
Congress  t<*inake  our  national  greenback  currency  a  legal  tender  for 
all  purposes,  and  thus  secure  for  the  people  a  perfect  instrument  of 
exchange. 

The  bill  provides  for  the  issue  of  $5,000,000  of  legal-tender  notes, 
and  such  additional  sums  as  ma}"  be  required  to  carry  into  effect  the 
provisions  of  the  act.  If  legal-tender  notes  should  be  required  ar  any 
time  for  the  entire  issue  of  convertible  bonds,  the  Government  would 
be  benefited  thereby  to  the  extent  of  the  interest,  for  while  green- 
backs are  out  no  interest  is  required.  My  opinion  is  that  $5,000,000 
greenbacks  would  put  in  operation  the  financial  reform  contemplated 
by  the  bill  and  effect  the  floating  of  at  least  $250,000,000  of  the  con- 
vertible bonds  within  a  single  year.  The  views  of  General  Spinner 
on  this  subject  are  so  clear  and  philosophical  that  I  am  constrained 
to  make  the  following  quotation  from  his  last  annual  report.  He 
says : 

It  is  very  probable  that  the  present  legally  authorized  amount  of  $400,000,000 
of  legal-tender  notes  need  not  be  increased  in  order  o>  carry  <>ut  thi.-s  scheme,  and  ir 
is  more  than  likely  that  under  the  then  changed  condition  of  the  currency,  with  no 
Tendency  to  go  into  wild  projects  and  stock  speculations,  tho  minimum  amount  of 
$:J36\000.000  would,  on  account  of  its  being  readily  obtained  in  exchange  for  the  pro- 
posed stocks,  be  sufficient  for  the  easy  transaction  of  the  legitimate  business  of  the 
country  at  times  when  commercial  wants  shall  need  the  largest  amount.  Should, 
however,  the  maximum  of  legal-tender  notes  authorized  by  law  be  found  to  be  in- 
adequate and  insufficient  to  prevent  the  brigands  and  banditti  who  infest  our 
money  marts,  and  who  at  times  conspire  against  the  public  weal  by  "lock-ups/' 


14 


making  money  scarce  when  most  needed  for  business  purposes,  thereby  robbing 
whole  communities  to  enrich  themselves,  the  Secretary  of  the  Treasury  might  be 
authorized  by  law  in  such  cases,  or  at  any  other  time  when  the  exigencies  Of  the 
Treasury  may  require  the  same,  to  issue  an  additional  limited  amount  of  such  con- 
Yertihle'legaf-tender  notes  in  exchange  for  any  United  States  6  per  cent,  stocks. 

At  the  close  of  the  war  of  the  rebellion  the  circulating  medium,  as 
I  have  shown,  was  largest,  and  private  credits  were  very  much  less 
in  vogue.  The  farmer  and  gardener  prospered,  the  merchant  sold  his 
goods  for  cash  or  on  short  credit,  the  manufacturer  found  a  ready  sale 
for  his  products  in  exchange  for  greenbacks,  and  private  credits  of  all 
kinds  were  less  resorted  to  than  at  any  other  time  in  the  history  of 
our  country.  You  know  we  then  enjoyed  prosperous  times.  Labor 
was  in  good  demand  and  well  paid;  more  work  was  done  at  that  time, 
and  consequently  more  wealth  created,  than  at  any  former  period  in 
the  history  of  our  country.  The  cause  for  this  prosperity  is  to  be 
found  in  the  fact  that  the  tariff  shielded  our  manufacturers  and  re- 
served to  them  the  markets  of  the  country,  and  we  had  a  greater  sup- 
ply of  currency  than  we  ever  had  before  or  since;  but  Hugh  McCul- 
loch,  in  an  evil  hour,  induced  Congress  to  put  on  the  screws  of 
"contraction."  Our  money  was  wound  up  tight,  and  the  prosperity 
of  the  country  with  it. 

Now,  experience  has  pixrven  that  where  the  public  credit  is  used  for 
such,  purposes  private  credits,  such  as  due-bills,  shin-plasters,  &c,  for 
workingmen,  are  less  employed,  and  to  the  manifest  advantage  and 
profit  of  t  he  people. 

It  is  of  the  highest  importance  to  the  prosperity  of  the  country  that 
Congress  should  furnish  an  adequate  amount  of  the  public  credit  for 
a  circulating  medium  to  facilitate  the  exchanges  and  settlements  of 
a  population  of  forty  millions,  and  of  the  vast  traffic  and  business  of 
an  active,  enterprising,  and  industrious  people,  rapidly  developing 
a  continent,  building  up  great  cities,  constructing  railways  through 
every  State  and  Territory,  and  establishing  industries  of  every  vari- 
ety and  description,  opening  mines,  digging  canals,  building  churches 
and  school-houses  and  universities,  and  adding  to  our  population  by 
immigration  four  hundred  thousand  per  annum. 

In  conclusion,  Mr.  Speaker,  I  will  call  your  attention  to  t*ie  unhappy 
situation  of  our  country.  Our  merchants  are  embarrassed  and  busi- 
ness of  all  kiuds  is  stagnant  and  unprofitable.  Workingmen  in  pro- 
cessions and  mass  meetings  demand  work  or  bread. 

In  this  situation,  Mr.  Speaker,  the  people  look  to  Congress  for  relief. 
Sir,  will  you  disappoint  them? 

Believing  that  the  adoption  of  the  financial  reform  contemplated  in 
the  pending  bill  will  be  a  great  boon  to  the  American  people,  and  a 
substantial  benefit  to  mankind,  I  have  given  much  time  to  its  consid- 
eration, with  the  sole  purpose  of  accomplishing  an  object  of  vast  com- 
mon interest,  involving  the  advancement  and  freedom  of  labor,  and 
the  general  welfare  and  prosperity  of  my  beloved  country. 

Mr.  VANCE  obtained  the  floor. 

Mr.  TOWNSEND.  Before  the  gentleman  from  Michigan  [Mr. 
Field]  takes  his  seat  I  would  like  to  ask  him  a  question. 

The  SPEAKER  pro  tempore,  (Mr.  Butler,  of  Tennessee.)  If  the 
gentleman  from  North  Carolina  [Mr.  Vance]  yields  for  that  purpose 
the  gentleman  from  Pennsylvania  [Mr.  Towtnsend]  can  proceed. 

Mr.  TOWNSEND.  I  think  I  understood  the  gentleman  from  Mich- 
igan to  say  That  since  1865  the  circulation  of  the  country  has  been 
reduced  to  the  extent  of  $1,300,000,000.  If  I  correctly  understood  the 
gentleman,  I  would  like  him  to  state  where  he  derives  that  informa- 
tion. 


15 


Mr.  FIELD.  I  refer  the  gentleman  to  tin*  official  reports.  The 
national  circulation  outstanding  on  (ho  1st  of  September,  1  st>."»,  is 
shown  by  the  official  statement  published  at  that  time.  The  amount 
at  that  time,  as  I  have  stated,  was  over  §->,()()0,()()(>,(MIO. 

Mr.  TOWXSENI).  What  do  I  understand  the  gentleman  to  mean 
by  "circulation  !" 

Mr.  FIELD.  The  gentleman  can  ascertain  that  by  an  examination 
of  the  remarks  I  have  already  submitted.  I  embrace  in  my  state- 
ment all  legal-tenders.  I  do  not  confine  the  estimate  to  the  green- 
backs, because  tho  5  per  cent,  legal-tenders  were  currency;  the  4  per- 
cent, legal-tenders  were  currency;  so  were  tho  compound-interest 
notes,  and  other  notes  which  the  gentleman  will  find  fully  enumerated 
in  my  printed  remarks.  The  gentleman  will  find  that  my  statement 
is  correct. 

Mr.  TOWNSEND.    Then  the  gentleman  includes  as  circulation 
bonds  as  well  as  notes. 
Mr.  FIELD.    I  mean  

Mr.  KELLEY.  If  the  gentleman  from  Michigan  will  permit  the 
remark,  I  understand  him  to  mean  simply  whatever  may  be  held  by 
the  banks  as  a  reserve. 

Mr.  FIELD.  I  mean  whatever  was  in  circulation  as  currency.  I 
do  not  embrace  irr  my  statement  the  five-twenties,  or  any  other  bonds 
of  the  Government. 

c 


•» 


